What changed in this filing

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Item 1. Financial Statements

2025-11-14 compared with 2025-08-14 · 408 added, 318 removed, 819 unchanged (47% of the section changed)

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thousands, except share and per share amounts)

June 30, 2025

September 30, 2025

December 31, 2024

Current assets

Accounts receivable, net of allowance of $ 3,289 and $ 2,616 at June 30, 2025 and December 31, 2024, respectively

Accounts receivable, net of allowance of $ 3,383 and $ 2,616 at September 30, 2025 and December 31, 2024, respectively

Inventories, net

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Class A common stock, $ 0.01 par value per share, 600,000,000 shares authorized, 1,386,551 and 3,023 shares issued and outstanding

as of June 30, 2025 and December 31, 2024, respectively *

Class B common stock, $ 0.0001 par value per share, 30,000,000 shares authorized, and 0 shares issued and outstanding as of June

as of September 30, 2025 and December 31, 2024, respectively *

Class B common stock, $ 0.0001 par value per share, 30,000,000 shares authorized, and 0 shares issued and outstanding as of September

30, 2025 and December 31, 2024 *

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Total liabilities and stockholders’ equity

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

After giving effect to

the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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thousands, except share and per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cost of sales

Gross profit (loss)

Operating expenses:

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General and administrative

Restructuring expenses

Depreciation and amortization

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$ ( 5,484.67 )

$ ( 12,044.84 )

Weighted-average shares of Class A common stock outstanding - basic and diluted (Note 9)*

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Comprehensive loss attributable to Greenlane Holdings, Inc.

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

After giving effect to

the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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$ ( 282,011 )

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

Balance September 30, 2025

$ ( 290,944 )

After giving effect to

the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

Class A Common Stock

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Issuance of Class A shares - (Note 9)

Issuance of Class A shares

Other comprehensive income

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$ ( 262,395 )

* After giving effect

to the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

$ ( 262,395 )

Issuance of Class A shares – (Note 9)

Issuance of Class A shares

Other comprehensive income

Balance September 30, 2024

$ ( 266,152 )

After giving effect to

the Reverse Stock Splits - See Note 9 - Stockholders’ Equity.

accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows from Operating Activities:

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Proceeds from issuance of Class A common stock and warrants

Proceeds from exercise of stock options, net of costs

Proceeds from notes payable

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Effects of exchange rate changes on cash

Net increase (decrease) in cash

Net increase in cash

Cash as of beginning of the period

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Three and Six Months Ended June 30, 2025 and 2024

the Three and Nine Months Ended September 30, 2025 and 2024

BUSINESS OPERATIONS AND ORGANIZATION

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cannabis dispensaries, smoke shops, multi-state operators (“MSOs”), specialty retailers, and retail consumers.

have been developing a portfolio of our own proprietary brands (the “Greenlane Brands”) that we believe will, over time,

deliver higher margins and create long-term value for our customers and shareholders.

Our wholly-owned Greenlane Brands includes Groove

– our more affordable product line and Higher Standards – our premium smoke shop and ancillary product brand, and our award

winning Vapor.com website and brand.

We also have category-exclusive licenses for the premium Marley Natural branded products, as well

as the K.Haring branded products.

Our wholly-owned Greenlane Brands includes Groove – our more affordable

product line and Higher Standards – our premium smoke shop and ancillary product brand, and our award winning Vapor.com website

and brand (the “Greenlane Brands”) .

We also have category-exclusive licenses for the premium Marley Natural branded products.

are the sole manager of the Operating Company and our principal asset is Common Units of the Operating Company (“Common Units”).

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Accordingly, pursuant to the VIE accounting

model, beginning in the fiscal quarter ended June 30, 2019, we consolidated the Operating Company in our consolidated financial statements

and reported a non-controlling interest related to the Common Units held by the members of the Operating Company (other than the Common

Units held by us) on our consolidated financial statements.

model, beginning in the fiscal quarter ended September 30, 2019, we consolidated the Operating Company in our consolidated financial

statements and reported a non-controlling interest related to the Common Units held by the members of the Operating Company (other than

the Common Units held by us) on our consolidated financial statements.

corporate structure is commonly referred to as an “Up-C” structure.

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fifty shares of common stock issued and outstanding were converted into one share of common stock .

In lieu of fractional shares w e rounded up to the next whole share, and accordingly, no fractional shares were issued in connection with the 2025 Reverse Stock Split.

In lieu of fractional shares we rounded

up to the next whole share, and accordingly, no fractional shares were issued in connection with the 2025 Reverse Stock Split.

Reverse Stock Split did not change the par value of the Common Stock or the authorized number of shares of Common Stock.

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and Going Concern

primary requirements for liquidity and capital are working capital and general corporate

Our primary sources of liquidity are our cash on hand and the cash flow that we generate from our operations, as well as proceeds

from other equity issuances.

Company has incurred net losses of $ 7.1 million and $ 5.1 million for the six months ended June 30, 2025 and 2024, respectively.

six months ended June 30, 2025 and 2024, cash used in operating activities were $ 7.9 million and $ 0.4 million, respectively.

believe that our cash on hand that includes cash raised in the February 2025 Private Placement and the cash flow that we generate

from our operations will be sufficient to fund our working capital and capital expenditure requirements and other liquidity requirements associated with our existing operations, for the next 12 months.

This is largely due to the Company’s Private Placement that occurred on February 19, 2025.

Stockholders’ Equity for more information.

primary requirements for liquidity and capital are working capital and general corporate needs.

Our primary sources of liquidity are

our cash on hand and the cash flow that we generate from our operations, as well as proceeds from other equity issuances.

Company has incurred net losses of $ 16.0

million and $ 8.9

million for the nine months ended September 30, 2025 and 2024,

respectively.

We used $11.8 million of cash in operating activities for the nine months ended September 30, 2025.

While we completed capital raises after quarter-end, there is inherent

uncertainty in our ability to generate sufficient cash to fund operations over the next twelve months.

These conditions raise substantial

doubt about our ability to continue as a going concern.

Management’s plans include reducing operating costs, monetizing legacy inventory,

and seeking additional financing.

See “Subsequent Events” for financing events after September 30, 2025.

forward, the Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended

plan over the next twelve months to improve the Company’s liquidity and profitability, which includes, without limitation:

reducing operating costs expense by taking additional restructuring actions to align cost with revenue to achieve profitability.

Further reducing operating

costs expense by taking additional restructuring actions to align cost with revenue to achieve profitability.

revenue by introducing new products and acquiring new customers.

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proceeds of $ 6.5 million.

In connection with the private placement, the Company issued an aggregate of 3,152 units and pre-funded

In connection with the private placement, the Company issued an aggregate of 3,152 units and pre-funded units.

The pre-funded units were sold at the same purchase price as the units, less the pre-funded warrant exercise price of $ 0.001 .

Each unit and pre-funded unit consisted of one share of common stock (or one pre-funded warrant) and two common warrants, each exercisable

for one share of common stock at an exercise price of $ 1,875 per share.

The common warrant will be exercisable on the initial exercise

date described in the common warrant and will expire 5.0 years from such date .

In February 2025, the Company exchanged 6,501 two

and one-half ( 2.5 ) year warrants with an exercise price of $ 2,235 per share.

Stockholders’ Equity for more information.

and pre-funded unit consisted of one share of common stock (or one pre-funded warrant) and two common warrants, each exercisable for

one share of common stock at an exercise price of $ 1,875 per share .

The common warrant will be exercisable on the initial exercise date

described in the common warrant and will expire 5.0 years from such date.

In February 2025, the Company exchanged 6,501 two and one-half

( 2.5 ) year warrants with an exercise price of $ 2,235 per share.

See Note 9 — Stockholders’

Equity for more information.

October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender, whereby the Company agreed to exchange

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per share (the “Exchange Warrants”).

2025 the Company repaid the Senior Subordinated Lender in full in the amount of $ 4.0

2025 the Company repaid the Senior Subordinated Lender in full in the amount of $ 4.0 million.

In February 2025, the Company exchanged

two and one-half ( 2.5 )

year warrants with an exercise price of $ 2,235

per share for the Series B warrants issued in the February

2,056 two and one-half ( 2.5 ) year warrants with an exercise price of $ 2,235 per share for the Series B warrants issued in the February

2025 private placement.

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or one (1) Pre-Funded Warrant, (ii) one (1) Series A PIPE Common Warrant to purchase one (1) share of Common Stock per warrant at an

exercise price of $ 1,115.63 (“Series A Warrant”) and (iii) one (1) Series B PIPE Common Warrant to purchase one (1) share of

Common Stock per warrant at an exercise price of $ 2,231.25 (“Series B Warrant” and together with the Series A Warrant, the “Warrants”).

exercise price of $ 1,115.63 (“Series A Warrant”) and (iii) one (1) Series B PIPE Common Warrant to purchase one (1) share

of Common Stock per warrant at an exercise price of $ 2,231.25 (“Series B Warrant” and together with the Series A Warrant,

the “Warrants”).

The initial exercise price of each Series A Warrant is $ 1,115.63 per share of Common Stock.

The Series A Warrants are exercisable following

stockholder approval and expire five (5) years thereafter.

The number of securities issuable under the Series A Warrant is subject to

adjustment as described in more detail in the Series A Warrant.

The initial exercise price of each Series B Warrant is $ 2,231.25 per share

of Common Stock or pursuant to an alternative cashless exercise option.

The Series B Warrants are exercisable following stockholder approval

and expire two and one-half ( 2.5 ) years thereafter.

The number of securities issuable under the Series B Warrant is subject to adjustment

as described in the Series B Warrant.

Warrants are exercisable following stockholder approval and expire five ( 5 ) years thereafter.

The number of securities issuable under

the Series A Warrant is subject to adjustment as described in more detail in the Series A Warrant.

The initial exercise price of each

Series B Warrant is $ 2,231.25 per share of Common Stock or pursuant to an alternative cashless exercise option.

The Series B Warrants

are exercisable following stockholder approval and expire two and one-half ( 2.5 ) years thereafter.

The number of securities issuable

under the Series B Warrant is subject to adjustment as described in the Series B Warrant.

on February 18, 2025, the Company entered into an Exchange Agreement with certain holders (the “Holders”) of three tranches

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Under such Exchange Agreement,

such Holders exchanged with the Company such existing warrants for approximately 8,172

new warrants to purchase common stock, substantially in the form of the Series B Warrants.

the three months ended June 30, 2025 the Holders exercised all of the Series B warrants issued to them.

such Holders exchanged with the Company such existing warrants for approximately 8,172 new warrants to purchase common stock, substantially

in the form of the Series B Warrants.

the nine months ended September 30, 2025 the Holders exercised all of the Series B warrants issued to them.

Receivables Financings

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Agreement”), dated as of September 22, 2023 with Synergy Imports, LLC (the “Secured Bridge Loan Lender”).

to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a bridge loan

of $ 2.2 million in new funds.

Additionally, the Secured Bridge Loan Lender agreed to defer payments totaling $ 2,028,604 already owed

by the Company under existing payment obligations and potentially defer up to an additional $ 2,655,778 which may become due pursuant

to existing agreements during the term of the September 2023 Loan Agreement.

to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a bridge loan of $ 2.2 million

in new funds.

Additionally, the Secured Bridge Loan Lender agreed to defer payments totaling $ 2,028,604 already owed by the Company under

existing payment obligations and potentially defer up to an additional $ 2,655,778 which may become due pursuant to existing agreements

during the term of the September 2023 Loan Agreement.

to certain exceptions, the Company agreed to pledge all of its assets, with the exception of deposit accounts and accounts receivable,

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During 2024 Cobra acquired the Secured Bridge Loan from the Secured Bridge Loan

Lender which was restructured as part of the Note Amendment on October 29, 2024, which was subsequently repaid in full in connection with the February 2025 Private Placement as set forth below.

Lender which was restructured as part of the Note Amendment on October 29, 2024, which was subsequently repaid in full in connection

with the February 2025 Private Placement as set forth below.

June 7, 2024, the Company entered into a subscription agreement with Cobra Alternative Capital Strategies, LLC (the “Subscription

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to 1,618,635 shares at the Qualified Offering Price.

October 29, 2024, the Company entered into the First Amendment to Amended and Restated Secured Promissory Note (the “Note

Amendment”) with Cobra.

Pursuant to the Note Amendment, Cobra agreed to extend the Maturity Date of its Secured Bridge Loan

and the Subscription Agreement (together the “Notes”).

October 29, 2024, the Company entered into the First Amendment to Amended and Restated Secured Promissory Note (the “Note Amendment”)

Pursuant to the Note Amendment, Cobra agreed to extend the Maturity Date of its Secured Bridge Loan and the Subscription

Agreement (together the “Notes”).

The new Maturity Date was changed to October 29, 2025 .

In consideration for the extension, the Company (i) agreed to make such Notes convertible at the option of Cobra

with a conversion price of $ 2,377.50

per share, (ii) agreed to prepay Cobra’s debt with 50 %

of any money raised by the Company from warrant exercise proceeds and from capital raise transactions, and (iii) issued Cobra an

aggregate of 667 5

five-year warrants with an exercise price of $ 2,280

per share which are identical to the Exchange Warrants.

This loan was repaid in full as part of the February 2025 Private

have completed several initiatives to expand our channel distribution, diversify our product offerings and improve our sales and marketing

In consideration for the extension,

the Company (i) agreed to make such Notes convertible at the option of Cobra with a conversion price of $ 2,377.50 per share, (ii) agreed

to prepay Cobra’s debt with 50 % of any money raised by the Company from warrant exercise proceeds and from capital raise transactions,

and (iii) issued Cobra an aggregate of 667 5 five-year warrants with an exercise price of $ 2,280 per share which are identical to the Exchange

This loan was repaid in full as part of the February 2025 Private Placement.

In an effort to minimize losses and working capital needs, management is

focusing on cost controls, simplifying operations, and monetizing legacy assets.

March 2025 we entered into two strategic marketing partnerships.

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Second, we entered into an agreement with ALD Group Limited to distribute their wide range of vaporization

products and where customers can benefit from an accelerated delivery window available through ALD’s advanced automated production platform.

products and where customers can benefit from an accelerated delivery window available through ALD’s advanced automated production

June 2025 we announced new Sales leadership and the restructuring of our Sales team to provide enhanced service to our customers and

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The condensed consolidated results of operations for

the three months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December

the three months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December

31, 2025, or any other future annual or interim period.

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The actual results could differ materially from those estimates.

Cash balances at financial institutions may, at

times, exceed FDIC insured limits.

The Company has not experienced losses in such accounts and monitors the credit quality of depository

institutions on an ongoing basis.

Accounts receivable and credit losses

Accounts receivable are recorded at invoiced amounts,

net of an allowance for expected credit losses.

The allowance is estimated using a combination of historical loss experience, customer

credit quality, current conditions, specific risk assessments, and forward-looking factors.

Receivables are written off when collection

efforts are exhausted.

Concentrations of credit risk and significant

Financial instruments that potentially subject

the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and trade receivables.

The Company maintains

cash deposits with high-quality financial institutions and, at times, such balances may exceed federally insured limits.

Concentrations

of credit risk with respect to trade receivables are limited by the large number of customers and the Company’s ongoing credit evaluations.

For the three and nine months ended September 30, 2025 and 2024, no single customer accounted for more than 10% of net sales, respectively.

are stated at the lower of cost or net realizable value.

Cost is determined using the weighted-average method and includes purchasing,

handling, and storage costs.

During the three months ended September 30, 2025, the Company recorded a $ 5.0 million increase to its reserve

for slow-moving and obsolete inventory to reflect the impact of continued aging and limited marketability of legacy product lines.

of September 30, 2025, total gross inventory was approximately $ 23.0 million, with reserves of approximately $ 17.0 million, resulting

in a net carrying value of approximately $ 6.0 million.

The reserve is developed by aging bucket and expected recovery rates using observable

exit pricing from recent transactions and indicative bids obtained in connection with our inventory monetization activities.

As a sensitivity

data point, a 10 percentage point reduction in expected recovery rates across the aged categories would increase the reserve by approximately

$ 0.6 million based on balances as of September 30, 2025.

Management will continue to evaluate recoverability each reporting period and

adjust the reserve as necessary based on realized liquidation results.

After September 30, 2025, the Company initiated an inventory monetization

project to accelerate disposition of aged inventory;

the Board is considering strategic alternatives for the legacy distribution business.

will continue to evaluate recoverability each reporting period and adjust the reserve as necessary based on actual sell-through results.

manage our global business operations through our operating and reportable business segments.

As of June 30, 2025, we determined that

we have one reportable operating business segment.

As of September 30, 2025, we determined

that we have one reportable operating business segment.

Our reportable segment has been identified based on how our chief operating decision

maker (“CODM”), which is a committee comprised of our Chief Executive Officer (“CEO”) and our Chief Financial

and Legal Officer (“CFO”), manages our business, makes resource allocation and operating decisions, and evaluates operating

maker (“CODM”), which is comprised of our Chief Financial

Officer (“CFO”), manages our business, makes resource allocation and operating decisions, and evaluates operating

is recognized when customers obtain control of goods and services promised by us.

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is placed by a customer.

We typically complete these orders within one to six months from the date of order, depending on the complexity

We typically complete these orders within one to nine months from the date of order, depending on the complexity

of the customization and the size of the order, but the completion timeline can vary by product type and terms of sales with each customer.

See “Note 8—Supplemental Financial Statement Information” for a summary of changes to our customer deposits liability

balance during the six months ended June 30, 2025 and the year ended December 31, 2024.

balance during the nine months ended September 30, 2025 and the year ended December 31, 2024.

estimate product returns based on historical experience and record them as a refund liability that reduces the net sales for the period.

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Our liability for returns, which is included within “Accrued expenses and other current liabilities”

in our consolidated balance sheets, was approximately $ 0.1 million and $ 0.1 million as of June 30, 2025 and December 31, 2024, respectively.

in our consolidated balance sheets, was approximately $ 0.1 million and $ 0.1 million as of September 30, 2025 and December 31, 2024, respectively.

elected to account for shipping and handling expenses that occur after the customer has obtained control of products as a fulfillment

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statements of operations and comprehensive loss.

Company previously transitioned to a commission revenue model for the majority of the sales for the Industrial

segment operating as a sales agent servicing vape customers and receiving a commission for these services.

The Company is

currently in the process of transitioning back to working directly with these customers and recognizing gross revenue versus

commission revenue.

customers represented approximately 30 % and 18 % of net sales for the three and six months ended June 30, 2025, respectively.

customer represented approximately 9 % and 19 % of net sales for the three and six months ended June 30, 2024,

respectively.

Company previously transitioned to a commission revenue model for the majority of the sales for the Industrial segment operating as a

sales agent servicing vape customers and receiving a commission for these services.

The Company is currently in the process of transitioning

back to working directly with these customers and recognizing gross revenue versus commission revenue.

customer represented approximately 12 % and 10 % of net sales for the three and nine months ended September 30, 2025, respectively.

customers represented approximately 36 % and 27 % of net sales for the three and nine months ended September 30, 2024, respectively.

Restructuring

and Transformation Costs

During the three and nine months ended September 30, 2025, we incurred costs in connection with evaluating

digital-asset alternatives and transitioning to a crypto-treasury operating model, as well as personnel-related actions under our cost-reduction

These costs are recognized within operating expenses.

The Board is considering strategic alternatives for the legacy distribution

the Company does not present discontinued operations.

Adopted Accounting Guidance

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Subsidiary Purchase Agreement

May 2024, the Company entered into an agreement with a group of individuals to sell 100 % equity interests of one of the

Company’s wholly-owned subsidiaries, Shavita B.V.

May 2024, the Company entered into an agreement with a group of individuals to sell 100 % equity interests of one of the Company’s

wholly-owned subsidiaries, Shavita B.V.

and substantially all of the assets of ARI Logistics B.V.

As of June 30,

2025, the transaction is in dispute as there was pending consideration obligations due to be transferred to the Company which were

not met, as well as other monetary obligations of the purchasers that remain unsatisfied.

As a result the Company did not record a

sale of the business under ASC 805.

As of September 30, 2025, the transaction

is in dispute as there was pending consideration obligations due to be transferred to the Company which were not met, as well as other

monetary obligations of the purchasers that remain unsatisfied.

As a result the Company did not record a sale of the business under ASC

Business Combinations .

The Company intends to vigorously pursue its claims against

Shavita and the purchaser group.

As of June 30, 2025, the Company continues to run the operations, however sales were not material

for the three months ended June 30, 2025 and 2024.

The Company intends to vigorously pursue its claims against Shavita and the purchaser group.

September 30, 2025, the Company continues to run the operations, however sales were not material for the three and nine months ended

September 30, 2025 and 2024.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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investment in equity securities without readily determinable fair value consist of ownership interests in Airgraft Inc.

determined that our ownership interests do not provide us with significant influence over the operations of these investments.

Accordingly, we account for our investments in these entities as equity securities.

We determined

that our ownership interests do not provide us with significant influence over the operations of these investments.

Accordingly, we account

for our investments in these entities as equity securities.

Inc., is a private entity and their equity securities do not have a readily determinable fair value.

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We did not identify any

fair value adjustments related to these equity securities during the three and six months ended June 30, 2025 and 2024,

impairment adjustments related to these equity securities during the three and nine months ended September 30, 2025 and 2024,

respectively.

of June 30, 2025 and December 31, 2024, the carrying value of our investment in equity securities without a readily determinable fair

value was approximately $ 1.9 million, respectively, included within “Other assets” in our condensed consolidated balance

of June 30, 2025, we had facilities financed under operating leases consisting of a warehouse combined with an office with lease term

expirations in 2026.

of September 30, 2025 and December 31, 2024, the carrying value of our investment in equity securities without a readily determinable

fair value was approximately $ 1.9 million, respectively, included within “Other assets” in our condensed consolidated balance

of September 30, 2025, we had facilities financed under operating leases consisting of a warehouse combined with an office with lease

term expirations in 2026.

Lease terms are generally three 3 to seven years for warehouses and office space.

Our lease agreements do

not contain any material residual value guarantees or material restrictive covenants.

Our lease agreements do not

contain any material residual value guarantees or material restrictive covenants.

following table provides details of our future minimum lease payments under operating lease liabilities recorded in our condensed consolidated

balance sheet as of June 30, 2025.

The table below does not include commitments that are contingent on events or other factors that are

currently uncertain or unknown.

balance sheet as of September 30, 2025.

The table below does not include commitments that are contingent on events or other factors that

are currently uncertain or unknown.

OF LESSEE OPERATING LEASE LIABILITY MATURITY

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Long-term portion

expense under operating leases was approximately $ 0.5 million and $ 0.3 million for the three months ended June 30, 2025 and 2024, respectively.

Rent expense under operating leases was approximately $ 1.0 million and $ 0.6 million for the six months ended June 30, 2025 and 2024,

expense under operating leases was approximately $ 0.3 million and $ 0.3 million for the three months ended September 30, 2025 and 2024,

respectively.

Rent expense under operating leases was approximately $ 1.1 million and $ 0.7 million for the nine months ended September

30, 2025 and 2024, respectively.

following expenses related to our operating leases were included in “general and administrative” expenses within our condensed

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(in thousands)

For the six months ended

For the nine months ended

September 30,

(in thousands)

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Total lease cost

table below presents lease-related terms and discount rates as of June 30, 2025:

average remaining lease terms

average discount rate

table below presents lease-related terms and discount rates as of September 30, 2025:

Weighted average remaining lease terms

Weighted average discount rate

debt balance, excluding operating lease liabilities and finance lease liabilities, consisted of the following amounts at the dates indicated:

(in thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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$ 0 during the October 29, 2024 restructuring.

Exchange Agreement

October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender, whereby the Company agreed to exchange

an aggregate of $ 4,617,307 of debt originally owed to Agile Capital Funding LLC and Cedar Advance LLC in a 3(a)(9) exchange for new Senior

Subordinated Notes in the principal amount of $ 4,000,000 due one year from issuance (the “Exchange Note”), reducing outstanding

indebtedness by approximately $ 617,000 .

The Exchange Note is convertible at the option of the holder at $ 2,377.50 per share.

In connection

with the Exchange, the Company issued an aggregate of 1,683 five-year warrants with an exercise price of $ 2,280 per share (the “Exchange

October 29, 2024, the Company entered into an Exchange Agreement with its Senior Subordinated Lender, whereby the Company agreed to

exchange an aggregate of $ 4,617,307

of debt originally owed to Agile Capital Funding LLC and Cedar Advance LLC in a 3(a)(9) exchange for new Senior Subordinated Notes

in the principal amount of $ 4,000,000

due one year from issuance (the “Exchange Note”), reducing outstanding indebtedness by approximately $ 617,000 .

The Exchange Note is convertible at the option of the holder at $ 2,377.50

In connection with the Exchange, the Company issued an aggregate of 1,683

5 five-year warrants with an exercise price of $ 2,280

per share (the “Exchange Warrants”).

Company evaluated the Exchange Agreement under ASC 470-50, Debt – Modifications and Extinguishment.

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for a fixed price of $ 2,280 and for a fixed number of shares with no potential for cash redemption.

The Company determines the value of

the warrants using an appropriate valuation method, including a Black-Scholes.

The Company determines the value

of the warrants using an appropriate valuation method, including a Black-Scholes.

As part of the debt extinguishment the 1,683 Exchange

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part of the 2025 Offering, the Company used a portion of the proceeds to pay off the Exchange Note in full in the amount of $ 4.0 million

during the six months ended June 30, 2025.

during the nine months ended September 30, 2025.

June 7, 2024, the Company entered into a subscription agreement for a note payable with Cobra Alternative Capital Strategies, LLC (“Cobra”).

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aggregate of 667

five-year warrants with an exercise price of $ 2,280

per share which are identical to the Exchange Warrants.

The Exchange common stock warrants which were deemed to classified as equity

as the warrants were exercisable for a fixed price of $ 2,280

and for a fixed number of shares with no potential for cash redemption.

The Company determines the value of the warrants using an

appropriate valuation method, including a Black-Scholes.

As part of the debt extinguishment the 667

Exchange Warrants were valued at $ 1.0

5 five-year warrants with an exercise price of $ 2,280 per share which are identical to the Exchange Warrants.

The Exchange common

stock warrants which were deemed to classified as equity as the warrants were exercisable for a fixed price of $ 2,280 and for a

fixed number of shares with no potential for cash redemption.

The Company determines the value of the warrants using an appropriate

valuation method, including a Black-Scholes.

As part of the debt extinguishment the 667 Exchange Warrants were valued at $ 1.0

million using the Black-Scholes model.

part of the 2025 Offering, the Company used a portion of the proceeds to pay off the Note in full in the amount of $ 4.0 million during

the six months ended June 30, 2025.

the nine months ended September 30, 2025.

September 22, 2023, the Company entered into a secured loan pursuant to a Loan and Security Agreement (the “September 2023 Loan

Agreement”), dated as of September 22, 2023 with Synergy Imports, LLC (the “Secured Bridge Loan Lender”).

to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a six-month bridge loan

to the September 2023 Loan Agreement, the Secured Bridge Loan Lender agreed to make available to the Company a nine-month bridge loan

of $ 2.2 million in new funds.

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recorded of $ 1.0 million is included in loss on extinguishment of debt in the accompanying consolidated statement of operations for the

six months ended June 30, 2024.

nine months ended September 30, 2024.

noted above, the company issued 667 common stock warrants which were deemed to classified as equity as the warrants were exercisable

for a fixed price of $ 2,280 and for a fixed number of shares with no potential for cash redemption.

The Company determines the value of

the warrants using an appropriate valuation method, including a Black-Scholes.

The Company determines the value

of the warrants using an appropriate valuation method, including a Black-Scholes.

As part of the debt extinguishment the 667 Exchange

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to dispute these claims in arbitration (Arbitration, S.D.

Recently Earth’s Healing, Inc.;

Redbud Roots Inc.,

and Summit Industrial Solutions LLC vs.

Earth’s Healing, Inc.;

Redbud Roots Inc., and Summit Industrial Solutions LLC vs.

Shenzhen Smoore Technology Co.

Jupiter Research Llc;

Research LLC;

Greenlane Holdings, Inc.;

and CB Solutions, LLC dba Canna Brand Solutions, Lead Case No.

The three Direct Purchaser Plaintiffs (DPPs) antitrust cases

below, filed a consolidated amended complaint.

Direct Purchaser Plaintiffs (DPPs) antitrust cases below, filed a consolidated amended complaint.

February 11, 2025, Earth’s Healing, Inc.

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and the Company is jointly defending the case with the other named defendants.

On April 10, 2025, Redbud Roots Inc.

April 10, 2025, Redbud Roots Inc.

3:25-cv-03221 (N.D.

Cal.)) brought a purchaser class action antitrust action against four U.S.

Distributors of Ccell products, including

Greenlane Holdings.

The Company is jointly defending the case with the other named defendants.

On April 17, 2025, Summit Industrial Solutions LLC.

Cal.)) brought a purchaser class action antitrust action against four

Distributors of Ccell products, including Greenlane Holdings.

The Company is jointly defending the case with the other named

April 17, 2025, Summit Industrial Solutions LLC.

3:25-cv-3431 (N.D.

Cal.) .)) brought a purchaser class action antitrust action against four U.S.

Distributors of Ccell products,

including Greenlane Holdings.

The Company is jointly defending the case with the other named defendants.

Cal.) .)) brought a purchaser class action antitrust action

against four U.S.

Distributors of Ccell products, including Greenlane Holdings.

The Company is jointly defending the case with the

other named defendants.

December 17, 2024, Crossmark, Inc.

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Greenlane Holdings, Inc., alleging antitrust violations.

The Company is currently

jointly defending these claims with the other named defendants in the case.

The Company is currently jointly defending these claims with the other named

defendants in the case.

November 15, 2024, Vaporous Technologies, Inc.

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Manufacturing Agreement by Vaporous against Warehouse Goods.

have not taken any reserves for litigation for the three and six months ended June 30, 2025 and 2024, respectively.

have not taken any reserves for litigation for the three and nine months ended September 30, 2025 and 2024, respectively.

Contingencies

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Estimated useful life

June 30, 2025

September 30, 2025

December 31, 2024

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Property and equipment, net

expense for property and equipment was approximately $ 0.2 million and $ 0.2 million for the three months ended June 30, 2025 and 2024,

expense for property and equipment was approximately $ 0.1 million and $ 0.2 million for the three months ended September 30, 2025 and

2024, respectively.

Depreciation expense for property and equipment was approximately $ 0.3 million and $ 0.5 million for the three months ended

June 30, 2025 and 2024, respectively.

Depreciation expense for property and equipment was approximately $ 0.4 million and $ 0.6 million for the three months

ended September 30, 2025 and 2024, respectively.

Current Assets

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(in thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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(in thousands)

June 30, 2025

September 30, 2025

December 31,2024

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We typically complete orders related to customer deposits within one

to six months from the date of order, depending on the complexity of the customization and the size of the order, but the order completion

to nine months from the date of order, depending on the complexity of the customization and the size of the order, but the order completion

timeline can vary by product type and terms of sale with each customer.

Changes in our customer deposits liability balance during the

three months ended June 30, 2025 were as follows:

three months ended September 30, 2025 were as follows:

OF CHANGES IN CUSTOMER DEPOSIT LIABILITY

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Revenue recognized

Balance as of June 30, 2025

Balance as of September 30, 2025

Other Comprehensive Income (Loss)

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Other comprehensive (income) loss attributable to non-controlling interest

Balance at June 30, 2025

Balance at September 30, 2025

Concentration

four largest vendors accounted for an aggregate of approximately 38.6 % and 26.5 % of our total purchases for the three months ended June

four largest vendors accounted for an aggregate of approximately 34 % and 44 % of our total purchases for the three months ended September

30, 2025 and 2024, respectively.

Our four largest vendors accounted for an aggregate of approximately 87 % and 18 % of our total purchases

for the three months ended June 30, 2025 and 2024, respectively.

for the nine months ended September 30, 2025 and 2024, respectively.

Party Transactions

Persofsky, a Greenlane Director, is also a Principal Owner of Green Gruff USA Inc, (“Green Gruff”).

In January 2025

the Company entered into an amended distribution agreement with Green Gruff.

Persofsky, who served as a Greenlane Director until October 23, 2025, is also a Principal Owner of Green Gruff USA Inc, (“Green Gruff”).

January 2025 the Company entered into an amended distribution agreement with Green Gruff.

Kovacevich, our former Chief Corporate Development Officer owns capital stock of Blum Holdings Inc.

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taken out on September 22, 2023, however, none were executive officers or directors of the Company.

October 24, 2025, the Company appointed its Chief Investment Officer to manage digital-asset treasury activities.

Investment Officer has relationships within the Berachain ecosystem.

As of September 30, 2025, there were no related-party

transactions to disclose.

The Company will treat the Chief Investment Officer and certain Berachain-affiliated entities as related

parties under ASC 850 and will disclose any material transactions in future periods.

STOCKHOLDERS’ EQUITY

of our Class A common stock have both voting interests and economic interests (i.e., the right to receive distributions or dividends,

whether cash or stock, and proceeds upon dissolution, winding up or liquidation), while shares of our Class B common stock have voting

interests but no economic interests.

Each share of our Class A common stock and Class B common stock entitles the record holder thereof

whether cash or stock, and proceeds upon dissolution, winding up or liquidation).

All Class B shares were converted to Class A in December 2022.

Accordingly, we no longer have Class B shares outstanding, and references to Class B are for historical

context only.

Each share of our Class A common stock entitles the record holder thereof

to one vote on all matters on which stockholders generally are entitled to vote, and except as otherwise required in the A&R Charter,

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to vote together with the holders of Common Stock, as a single class with such holders of preferred stock).

June 25, 2025, the Company completed a one-for-750 reverse stock split of our issued and outstanding shares of Common Stock, as

further described in “Note 1 – Business Operations and Organization.” As a result of the 2025 Reverse Stock Split,

June 25, 2025, the Company completed a one-for-750 reverse stock split of our issued and outstanding shares of Common Stock, as further

described in “Note 1 – Business Operations and Organization.” As a result of the 2025 Reverse Stock Split, every 750

shares of Common Stock issued and outstanding were converted into one share of Common Stock.

In lieu of fractional shares, we

rounded up to the next whole share, and accordingly, no fractional shares were issued in connection with the 2025 Reverse Stock

In lieu of fractional shares, we rounded

up to the next whole share, and accordingly, no fractional shares were issued in connection with the 2025 Reverse Stock Split.

Reverse Stock Splits did not change the par value of the Common Stock or the authorized number of shares of Common Stock.

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which we agreed to issue and sell an aggregate of 78 shares of our Class A common stock, pre-funded warrants to purchase up to 3,075

shares of our Class A common stock (the “August 2024 Pre-Funded Warrants”) and warrants to purchase up to 6,303 shares

of our Class A common stock (the “August 2024 Standard Warrants”).

shares of our Class A common stock (the “August 2024 Pre-Funded Warrants”) and warrants to purchase up to 6,303 shares of

our Class A common stock (the “August 2024 Standard Warrants”).

for aggregate gross cash proceeds of $ 6.5 million.

connection with the private placement, the Company issued an aggregate of 3,152 units and pre-funded units.

The pre-funded units

were sold at the same purchase price as the units, less the pre-funded warrant exercise price of $ 0.001 .

Each unit and pre-funded unit

consisted of one share of common stock (or one pre-funded warrant) and two common warrants, each exercisable for one share of common

stock at an exercise price of $ 1,875 per share.

The common warrant were exercisable on the initial exercise date described in the common

warrant and will expire 5.0 years from such date.

In connection

with the private placement, the Company issued an aggregate of 3,152 units and pre-funded units.

The pre-funded units were sold at the

same purchase price as the units, less the pre-funded warrant exercise price of $ 0.001 .

Each unit and pre-funded unit consisted of one

share of common stock (or one pre-funded warrant) and two common warrants, each exercisable for one share of common stock at an exercise

price of $ 1,875 per share.

The common warrant were exercisable on the initial exercise date described in the common warrant and will

expire 5.0 years from such date.

February 18, 2025, the Company entered into an Exchange Agreement with Holders of three tranches of warrants to purchase Common Stock

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Under such Exchange Agreement, such Holders exchanged with the Company

such existing warrants for approximately 8,172

new warrants to purchase common stock, substantially in the form of the Series B Warrants.

The Company exchanged 6,117

not previously exercised into two and one-half ( 2.5 )

year warrants in the form of the Series B Warrants with an exercise price of $ 2,235

such existing warrants for approximately 8,172 new warrants to purchase common stock, substantially in the form of the Series B Warrants.

The Company exchanged 6,117 warrants not previously exercised into two and one-half ( 2.5 ) year warrants in the form of the Series B Warrants

with an exercise price of $ 2,235 per share.

2024 Private Placement

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with the Exchange, the Company issued an aggregate of 2,350

five-year warrants with an exercise price of $ 2,280

per share (the “Exchange Warrants”).

The Exchange Warrants which were deemed to be classified as equity as the warrants

were exercisable for a fixed price of $ 2,280

and for a fixed number of shares with no potential for cash redemption.

The Company determines the value of the warrants using an

appropriate valuation method, including a Black-Scholes.

As part of the debt extinguishments, the 2,350

Exchange Warrants were valued at $ 3.7

million using the Black-Scholes model.

February 2025, the Company exchanged the remaining 2,056 warrants not previously exercised into warrants which were substantially

equivalent to the Series B Warrants which were two and one-half ( 2.5 ) year warrants in the form of the Series B Warrants with an exercise

price of $ 892.50 per share.

5 five-year warrants with an exercise price of $ 2,280 per share (the “Exchange Warrants”).

The Exchange Warrants which

were deemed to be classified as equity as the warrants were exercisable for a fixed price of $ 2,280 and for a fixed number of shares

with no potential for cash redemption.

The Company determines the value of the warrants using an appropriate valuation method,

including a Black-Scholes.

As part of the debt extinguishments, the 2,350 Exchange Warrants were valued at $ 3.7 million using the

Black-Scholes model.

February 2025, the Company exchanged the remaining 2,056 warrants not previously exercised into warrants which were substantially equivalent

to the Series B Warrants which were two and one-half ( 2.5 ) year warrants in the form of the Series B Warrants with an exercise price

of $ 892.50 per share.

2025 Private Placement

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share of Common Stock or one (1) Pre-Funded Warrant, (ii) one (1) Series A PIPE Common Warrant to purchase one (1) share of Common Stock

per warrant at an exercise price of $ 1,115.63 (the “Series A Warrant”) and (iii) one (1) Series B PIPE Common Warrant to purchase

one (1) share of Common Stock per warrant at an exercise price of $ 2,231.25 (the “Series B Warrant” and together with the Series

A Warrant, the “Warrants”).

The initial exercise price of each Series B Warrant is $ 2,231.25 per share of Common Stock or pursuant

to an alternative cashless exercise option

per warrant at an exercise price of $ 1,115.63 (the “Series A Warrant”) and (iii) one (1) Series B PIPE Common Warrant to

purchase one (1) share of Common Stock per warrant at an exercise price of $ 2,231.25 (the “Series B Warrant” and together

with the Series A Warrant, the “Warrants”).

The initial exercise price of each Series B Warrant is $ 2,231.25 per share of

Common Stock or pursuant to an alternative cashless exercise option

initial exercise price of each Series A Warrant is $ 1,115.63 per share of Common Stock.

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adjustment as described in more detail in the Series A Warrant.

The initial exercise price of each Series B Warrant is $ 2,231.25 per share

of Common Stock or pursuant to an alternative cashless exercise option.

The Series B Warrants are exercisable following stockholder approval

and expire two and one-half (2.5) years thereafter.

The number of securities issuable under the Series B Warrant is subject to adjustment

as described in the Series B Warrant.

The initial exercise price of each Series B Warrant is $ 2,231.25 per

share of Common Stock or pursuant to an alternative cashless exercise option.

The Series B Warrants are exercisable following stockholder

approval and expire two and one-half (2.5) years thereafter.

The number of securities issuable under the Series B Warrant is subject

to adjustment as described in the Series B Warrant.

connection with the Private Placement, the Company entered into a registration rights agreement with the Purchasers on February 18, 2025

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the resale of the Securities within 30 calendar days of the closing of the offering.

part of the Purchase Agreement the Company agreed to place $ 2.5 million

into an escrow account to ensure there were no misrepresentations were made by the Company as part of the private placement.

June 30, 2025.

the escrow balance of $ 1.7 million

was repaid to the Company and $ 0.8 million

was credited back to the Purchasers as a result of late filings made by the Company.

Exercise of Pre-Funded Warrants

During the three months ended June 30, 2025, investors

exercised 1,353,658 Series B warrants and 21,777 additional pre-funded warrants.

As the warrants were pre-funded from proceeds of previous

offerings, no monies were collected by the Company upon exercise of the warrants.

part of the Purchase Agreement the Company agreed to place $ 2.5 million into an escrow account to ensure there were no misrepresentations

were made by the Company as part of the private placement.

As of September 30, 2025.

the escrow balance of $ 1.7 million was repaid to

the Company and $ 0.8 million was credited back to the Purchasers as a result of late filings made by the Company.

of Pre-Funded Warrants

During the nine months ended September 30, 2025, investors exercised a total of 1,375,435

pre-funded warrants previously issued in the February 2025 financing (including

1,353,658 Series B pre-funded warrants and 21,777

additional pre-funded warrants).

All exercises were effected on a cashless basis;

the Company received no proceeds.

There were no pre-funded

warrant exercises during the three months ended September 30, 2025.

Loss Per Share

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(in thousands, except per share data)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands, except per share data)

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$ ( 5,484.67 )

$ ( 12,044.84 )

June 2022 Pre-Funded Warrants, October 2022 Pre-Funded Warrants, July 2023 Pre-Funded Warrants were included in the weighted-average

in the computation of basic net loss per share of Class A common stock for the three months ended June 30, 2025 and 2024, respectively,

in the computation of basic net loss per share of Class A common stock for the three months ended September 30, 2025 and 2024, respectively,

beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive and their exercise was virtually assured.

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February 2025 Pre-Funded Warrants were included in the weighted-average in the computation of basic net loss per share of Class A commons

stock for the three months ended June 30, 2025, beginning with their issuance date, as their stated exercise price of $ 0.001 was non-substantive

and their exercise was virtually assured.

the three and six months ended June 30, 2025 and 2024, respectively, shares of Class B common stock and stock options and warrants to

purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A common

stock because the effect would have been anti-dilutive.

of our Class B common stock do not share in our earnings or losses and are therefore not participating securities.

As such, separate

calculations of basic and diluted net loss per share for each of our Class B common stock under the two-class method have not been presented

for the three months ended June 30, 2025 and 2024, respectively.

As of December 31, 2022, all Common Units of the Operating Company and

Class B common stock had been exchanged for Class A common stock, and we owned 100.0% of the economic interests in the Operating Company.

stock for the nine months ended September 30, 2025, beginning with their issuance date, as their stated exercise price of $ 0.001 was

non-substantive and their exercise was virtually assured.

the three and nine months ended September 30, 2025 and 2024, respectively, stock options and warrants

to purchase Class A common stock were excluded from the weighted-average in the computation of diluted net loss per share of Class A

common stock because the effect would have been anti-dilutive.

following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net

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OF OUTSTANDING POTENTIALLY DILUTIVE SECURITIES

As of June 30,

As of September 30,

Stock options to purchase common stock

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and Restated 2019 Equity Incentive Plan

April 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

In August 2021, we adopted, and our shareholders

approved, the Amended and Restated 2019 Equity Incentive Plan (the “Amended 2019 Plan”), which amends and restates the 2019

Plan in its entirety.

At our 2022 Annual Meeting of Stockholders on August 4, 2022, stockholders approved the Second Amended and Restated

2019 Equity Incentive Plan (the “Second Amended 2019 Plan”) which, among other things, increased the number of shares of

Class A common stock authorized for issuance under the Amended 2019 Plan.

Following the effect of the Reverse Stock Splits, the total

number of shares of Class A common stock authorized for issuance is 10,000 shares.

Second Amended 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards.

The Second Amended 2019 Plan is designed to enhance our ability to attract, retain and motivate our employees, directors, and executive

officers, and incentivizes them to increase our long-term growth and equity value in alignment with the interests of our stockholders.

June 2, 2023, the Company’s stockholders approved a third amendment and restatement of the 2019 Plan (the “Third Amended

The Third Amended Plan, among other things, increases the number of shares of Class A common stock authorized for

issuance under the Second Amended 2019 Plan by 19,078

shares (pre 2025 Reverse Stock Split) to an aggregate of 29,078

shares (pre 2025 Reverse Stock Split).

As of the date of this Annual Report on Form 10-K, we have not filed a Registration Statement on Form S-8 with the

Securities and Exchange Commission to register the additional shares authorized under the Third Amended Plan.

On December 31, 2024, the Company’s stockholders

approved a fourth amendment and restatement of the 2019 Plan (the “Fourth Amended Plan”).

The Fourth Amended Plan, among other

things, increases the number of shares of Class A common stock authorized for issuance under the Second Amended 2019 Plan by

The Amendment

authorizes a 386 share increase in the number of shares our Class A Common Stock available for future award grants under the 2019 Equity

Incentive Plan to an aggregate of 424 shares, as of that date.

The Amendment authorized the

inclusion of an evergreen provision that automatically replenishes the share pool to an amount equal to 15% of the total number of shares

of Stock outstanding shares of Common Stock.

In April 2019, the Company adopted the Greenlane Holdings, Inc.

Equity Incentive Plan (the “2019 Plan”).

The Plan has been amended and restated several times since adoption.

As of September

30, 2025, the Company’s equity incentive plan balances, including the total shares authorized for issuance, awards outstanding,

and shares available for future grant, reflect all amendments approved through that date, including the plan’s evergreen feature.

Changes approved after September 30, 2025 are disclosed in “Subsequent events”

Compensation Expense

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(in thousands)

Six months ended

Nine months ended

September 30,

(in thousands)

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Total equity-based compensation expense

Company did not record equity-based compensation for the three months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, there was

no remaining unrecognized compensation expense.

Company did not record equity-based compensation for the three months ended September 30, 2025 and 2024, respectively.

As of September

30, 2025, there was no remaining unrecognized compensation expense.

a result of the IPO and the related transactions completed in April 2019, we owned a portion of the Common Units of the Operating Company,

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in our US and state tax returns.

the three months ended June 30, 2025 and 2024, respectively, management performed an assessment of the realizability of our deferred

the three months ended September 30, 2025 and 2024, respectively, management performed an assessment of the realizability of our deferred

tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient

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Consequently, we established a full valuation allowance against

our deferred tax assets and reflected a carrying balance of $ 0 as of June 30, 2025 and December 31, 2024, respectively.

our deferred tax assets and reflected a carrying balance of $ 0 as of September 30, 2025 and December 31, 2024, respectively.

that management determines that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount,

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Tax Positions

the three months ended June 30, 2025 and 2024, respectively, we did no t have any unrecognized tax benefits as a result of tax positions

the three months ended September 30, 2025 and 2024, respectively, we did no t have any unrecognized tax benefits as a result of tax positions

taken during a prior period or during the current period.

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The Company is subject to audit examination for federal and state purposes for the years still eligible under statutory guidelines.

As of the date these financial

statements were issued, there were not any ongoing income tax audits.

of the date these financial statements were issued, there were not any ongoing income tax audits.

Receivable Agreement (TRA)

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Based on this assessment,

our TRA liability was none as of June 30, 2025 and December 31, 2024.

our TRA liability was none as of September 30, 2025 and December 31, 2024.

utilization of the deferred tax assets subject to the TRA becomes more likely than not in the future, we will record a liability related

to the TRA, which would be recognized as expense within our condensed consolidated statements of operations and comprehensive (loss)

the three months ended June 30, 2025 and 2024, respectively, we did not make any payments, inclusive of interest, to members of the Operating

Company pursuant to the TRA.

the three months ended September 30, 2025 and 2024, respectively, we did not make any payments, inclusive of interest, to members of

the Operating Company pursuant to the TRA.

SEGMENT REPORTING

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Therefore, segment information is prepared on the same basis that management reviews financial information for operational decision-making

Our CODM is a committee comprised of our CEO and our CFO.

determined we had one operating segment as of June 30, 2025.

This operating segment aligns with how we manage our business as of the

fourth quarter of 2024.

The CFO acts as the CODM.

determined we had one operating segment as of September 30, 2025.

This operating segment aligns with how we manage our business as of

the fourth quarter of 2024.

The accounting policies of the reportable segments are the same as those described in “Note 2 - Summary

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The following

table sets forth information by reportable segment for the three months ended June 30, 2025 and 2024.

table sets forth information by reportable segment for the three months ended September 30, 2025 and 2024.

SCHEDULE OF NET SALES BY MAJOR PRODUCT CATEGORY

(in thousands)

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands)

Cost of sales

Gross profit (loss)

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

Cost of sales

Gross profit (loss)

following table sets forth specific asset categories which are reviewed by our CODM in the evaluation of operating segments:

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(in thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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(in thousands)

Three Months Ended June 30,

Three Months Ended September 30,

(in thousands)

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(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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(in thousands)

June 30, 2025

December 31, 2024

(in thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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Total long-lived assets

SUBSEQUENT EVENTS

placement and adoption of digital asset treasury strategy

October 20, 2025, the Company entered into subscription agreements for a private placement of Class A common stock and pre-funded

warrants, such pre-funded warrants being subscribed for in U.S.

dollars, USDC or USDT (or a combination thereof) or BERA, the native

digital asset of the Berachain blockchain.

The BERA consideration was valued at $ 1.9477

per BERA, based on a a seven-day trailing VWAP $ 0.9836

in the case of the Berachain Foundation.

On October 23, 2025, the Company closed the private placement, and received approximately

million in cash and approximately $ 19.0 million

in USDT and USDC, and held approximately 54.2

million BERA at closing.

Beginning with periods after October 23, 2025, in-scope crypto assets will be measured at fair value with

changes recognized in net income;

no amounts are reflected in the Company’s financial statements for the period ended

September 30, 2025.

See the Company’s Current Report on Form 8-K filed on October 20, 2025 for the terms of the private

placement, including the issuance of pre-funded warrants, exercise price, automatic cashless exercise upon stockholder approval, and

beneficial ownership limits related to the pre-funded warrants.

Company intends to use the majority of proceeds to acquire BERA and to establish digital asset treasury operations, with approximately

$ 3.0 million earmarked for legacy operations.

private placement and associated adoption of a digital asset treasury strategy are non-recognized subsequent events under ASC 855.

nature of the transactions and the expected financial statement impact in future periods are disclosed below.

policy and GAAP implications

assets that meet the scope of ASU 2023-08 (ASC 350-60) are measured at fair value each reporting period with changes recognized in net

Beginning with periods after October 23, 2025, the Company will present subsequent changes in the fair value of its crypto assets

in the consolidated statements of operations and will provide the required ASC 820 fair value and ASC 350-60 roll-forward disclosures,

including principal market, pricing sources, and significant holdings.

Because these transactions occurred after September 30, 2025,

no amounts related to these crypto assets are recognized in the accompanying 2025’s third quarter financial statements.

Subsequent to September 30, 2025, the Company

established a digital-asset treasury and expects to begin holding crypto assets

in the fourth quarter of 2025.

See Part II, Item 1A “Risk Factors” for a discussion of risks related to custody, valuation,

pricing volatility, and regulatory matters.

Equity Incentive Plan

Subsequent to September 30, 2025, the

Company included in its proxy statement a proposal to increase the share reserve under the Company’s equity incentive plan to 3,000,000

The plan already includes an evergreen provision, approved at the December 2024 annual meeting, that automatically increases the plan reserve on January 1 each year by 15 percent

of the total number of shares outstanding as of the prior December 31.

The Company expects to file a registration statement on Form S-8 to register any additional shares

following stockholder approval.

These proposed changes are not reflected in the Company’s balances as of September 30,

October 23, 2025, the Board established a Digital Assets Committee to oversee the Company’s digital-asset treasury strategy.

Related-party

October 24, 2025, the Company entered into an employment agreement with its Chief Investment Officer to manage the BERA treasury strategy.

The executive has disclosed ownership interests and ongoing activities in a separate digital asset trading business and an economic interest

in BERA awards from a Berachain-affiliated entity.

Management has concluded there were no related-party transactions requiring disclosure

under Item 404(a) of Regulation S-K as of the 8-K filing date;

however, the Company will treat the officer as a related party under ASC

850 and will monitor transactions with the Berachain Foundation or other Berachain-affiliated entities and will disclose any material

related-party transactions in future periods.

September 30, 2025, the Board began evaluating strategic alternatives for the legacy distribution business.

September 30, 2025, the Company initiated an Inventory Monetization Project to accelerate disposition of aged inventory.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements